Obama Nixes XL Pipeline Project

Facing what he called a “rushed and arbitrary” deadline set by Republicans, President Obama has denied TransCanada Corp.’s permit for the $7 billion Keystone XL pipeline from Canada to Texas.

Grist.org

After thousands of opponents protested the pipeline project Nov. 6 at the White House, President Obama said the project would be reviewed and part of the line rerouted.

Obama said his decision, announced late Wednesday (Jan. 18), was not about the merits of the project, but was due wholly to his agreement with the State Department that there was not enough time to fully evaluate the 1,700-mile-long system, whose route was recently changed.

In fact, the president left open the possibility of similar pipeline projects, and TransCanada announced almost immediately that it would submit a new application.

‘Arbitrary’ Deadline

“This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people,” Obama said in a statement.

“I’m disappointed that Republicans in Congress forced this decision, but it does not change my Administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil.”

The administration was racing a deadline of Feb. 21 to decide on the project. That clock was imposed in December by a rider attached to the payroll tax bill.

Rocky Road

The Keystone XL project—officially, the Keystone Gulf Coast Expansion Project—has had a bumpy history. First proposed in 2008, the system was to have been the third phase of the $13 billion Keystone pipeline network.

U.S. State Department

The 1,700-mile line was to have carried 830,000 barrels of heavy crude a day.

From the start, some critics objected to the plan for the pipeline to carry heavy oil-sands crude (also known as tar sands) a day, which many consider more corrosive than light crude. The system was to carry 830,000 barrels a day.

Others questioned whether TransCanada could safely operate the project, which would nearly double the system’s capacity. They noted that TransCanada’s current 1,300-mile Keystone system sustained 14 spills in just over a year after it began operation in June 2010.

The criticism then extended to the State Department, which seemed likely to approve the cross-border project. In August, the department released a nine-volume, 1,000-page Final Environmental Impact Statement (FEIS) showing minimal environmental risk from the project.

The FEIS was the State Department’s third, and supposedly final, review of the project. Approval by the end of the year was expected.

Questions and Protests

Environmental concerns and protests escalated, however. Some members of Congress and the Environmental Protection Agency criticized the State Department’s oversight and called its review inadequate.

Those concerns grew through nine public hearings last fall and gained traction when questions arose about Secretary of State Hillary Clinton’s possible connections to the project. A former high-ranking Clinton campaign aide became a lobbyist for TransCanada and was lobbying the State Department for the pipeline’s approval.

White House photo

President Obama said he remained committed “to American-made energy that creates jobs and reduces our dependence on oil.”

Meanwhile, the Department of Homeland Security, the Department of Transportation and other agencies were still reviewing the project.

Wait … and Hurry Up

In November, the White House announced that it would ask TransCanada to reroute an environmentally sensitive segment of the system and would delay a final decision on the project until after the 2012 U.S. elections.

“Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood,” Obama said at the time.

That plan was upended, however, when the payroll tax-cut bill started a 60-day clock for the decision.

‘In the National Interest’

In a statement Wednesday, the State Department said it did “not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest.”

The department called its review of the project “transparent, thorough, and rigorous” but said it needed additional information to evaluate the new route proposed in November.

The department estimated that it could complete that review by early 2013 and said that TransCanada and the state of Nebraska (the area of the route at issue) agreed with that timeline.

However, the statement also noted that the Temporary Payroll Tax Cut Continuation Act of 2011 gave the president 60 days “to determine whether the Keystone XL pipeline is in the national interest – which is insufficient for such a determination.”

Not Over

Whatever the fate of Keystone XL, oil and job demands are likely to spur similar projects, critics and advocates say.

Obama said the administration would “continue to look for new ways to partner with the oil and gas industry to increase our energy security –including the potential development of an oil pipeline from Cushing, OK, to the Gulf of Mexico.”

And the Los Angeles Times concluded, after surveying industry analysts:

“Americans' thirst for oil probably will push the administration and TransCanada … to find a way to transport Canadian crude across the United States, even if it's not through a pipeline called Keystone XL.”